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 A host of supply and demand concerns in the U.S. and abroad, as well as the depreciating dollar, have pushed crude prices up more than 4 percent this week.
Light, sweet crude for May delivery was down 56 cents to $114.30 a barrel in electronic trading on the New York Mercantile Exchange by midday in Europe.
On Thursday, the May contract hit a trading record of $115.54 as the dollar fell to a new low against the euro. Crude finished the floor session down 7 cents at $114.86 a barrel after falling back when the dollar strengthened.
In London, Brent crude futures fell 76 cents to $111.67 a barrel on the ICE Futures exchange.
Investors have been buying oil contracts as a hedge against the weakening dollar, betting that rising commodity prices will offset dollar declines.
But Friday, the dollar rose slightly, after falling to all-time record low Thursday against the euro, which hit $1.5982.
By midday in Europe, the euro stood at $1.5867 and was seen staying within a narrow range.
"Oil has been taking so widely its directional clue from the dollar that when the dollar does not move, oil does not know where to go," Olivier Jakob of Petromatrix in Switzerland said in a report.
Traders were also keeping an eye on unrest in Africa's biggest crude producer.
A militant group in Nigeria said it had sabotaged a major oil pipeline operated by a Royal Dutch Shell PLC joint venture and promised further attacks on the country's petroleum industry.
A spokesman for Shell had no immediate comment on any attack.
Attacks since early 2006 on oil infrastructure by the Movement for the Emancipation of the Niger Delta have cut nearly one quarter of Nigeria's normal petroleum output, boosting oil prices.
The militants say they are fighting to force the federal government to send more oil industry revenue to their areas, which remain desperately poor despite decades of oil production.
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 Prices were supported by a U.S. Energy Department report on inventories, released Wednesday, that showed gasoline supplies fell 5.5 million barrels last week
-- much more than what analysts had expected.
That slide comes as the U.S. heads into its peak summer driving season, a period when demand and retail gasoline prices surge. The department's Energy Information Administration report also showed crude inventories fell 2.3 million barrels for the same period.
David Moore, a commodity strategist with the Commonwealth Bank of Australia in Sydney, said strengthening demand in other parts of the world was also supporting oil prices.
"Outside of the U.S., oil demand in some areas has remained firm," Moore said. "Indicative of that was the recent Chinese trade data, which showed very strong growth in both crude oil imports and imports of oil products."
The Chinese government last week reported that China's oil imports surged to a record 17.3 million tons in March, as the country nearly unseated Japan as the world's second-largest buyer of foreign crude oil. China imported an average of just over 4 million barrels a day, according to calculations based on data from China's Customs Administration.
An International Energy Agency report that said Russian oil production dropped this year for the first time in a decade also helped to boost prices.
In other Nymex trading, heating oil futures fell 1.69 cents to $3.2505 a gallon while gasoline prices lost 2.09 cents to $2.9369 a gallon. Natural gas futures fell 1.3 cents to $10.370 per 1,000 cubic feet.
[Associated Press; By PABLO GORONDI]
Associated Press writer Gillian Wong in Singapore contributed to this report.
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